Colorado River Water Bank: Making Water Conservation Profitable

Case Study

In Colorado, a group of west slope ranchers devised a model for water banking that could make water conservation more profitable than irrigating, and now they are working with state agencies and conservation organizations to turn that idea into reality.

Still in the development stage, the Colorado River Water Bank would allow municipalities on Colorado’s Front Range to buy water consumption rights from irrigators on Colorado’s west slope who reduce their water consumption. This marketbased approach to water conservation means water has value beyond irrigation—water itself is becoming a profitable crop.

This case study explains why water conservation is paramount in Colorado and how water banking is the most cost-effective approach to water conservation. The conclusion offers recommendations for other groups considering water banking as a way to get more value out of water.

Brandon Scarborough is a research fellow at PERC currently focused on the use of water markets in the West to restore stream flows for wildlife, fish and other environmental amenities. He is just completing another project on carbon sequestration and the efficacy of using forest management to address climate change. His other interests include the...

Reed Watson is the executive director at PERC. His research focuses on the implementation of market-based solutions to natural resource conflicts focusing particularly on public lands, water, and wildlife issues. With Terry Anderson and Brandon Scarborough, he co-authored Tapping Water Markets (RFF Press, 2012).Watson holds a J.D. and M.A. in...

Founded 30 years ago in Bozeman, Montana, PERC—the Property and Environment Research Center—is the nation’s oldest and largest institute dedicated to improving environmental quality through property rights and markets.

The goal of PERC’s programs is to fully realize the vision of establishing “PERC University,” where scholars, students, policy makers, and others convene to expand the applications of free market environmentalism.

PERC's fellowships share a common goal of exposing new scholars, students, journalists, and policy makers to free market environmentalism, as well as enable scholars already familiar with FME to explore new applications.